Salvage: Dealing with Damaged Inventory After a Loss

ADJUSTING TODAY

2. Location

3. Handling

4. Market Value

The value of salvage is only as high as someone is willing to pay for it. It has a different value to different people and dif- ferent industries located in different parts of the world. A Ralph Lauren business suit that retails in New York City for $1,000 may become “unsalable” by the business owner because it has smoke odor from a fire. This same suit with the smell of smoke may be very saleable in a special sale or distressed goods market.

5. Other Considerations

The value of the salvage also depends largely on the expertise of who is selling it. The larger your base of potential buyers, the higher the value the goods will have. An insured may be most in tune with their “niche” market or industry and thus be in a better position to handle his/her damaged inventory than a professional salvor. On many occasions salvors consult with other prior insureds as to the market value of goods.

A policyholder and their insurance company usually have some similar considerations when evaluating the salvage potential of damaged goods, however, the insured must also consider “tomorrow.” The insurance company will also be more interested in the insured’s future if there is Business Inter- ruption or Loss of Earnings coverage in the applicable policy, but the insured needs to protect their business in the immediate future and in the long term.

Additional considerations:

The value of the salvage also depends largely on the expertise of who is selling it. The larger your base of potential buyers, the higher the value the goods will have.


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